Bank of Ghana Reports GH¢60.81 Billion Losses in 2022 Due to Debt Restructuring and Currency Depreciation
The Bank of Ghana (BoG) has disclosed significant losses amounting to GH¢60.81 billion for the 2022 financial year, marking a sharp contrast to the profit of GH¢1.23 billion achieved in 2021.
The losses incurred were attributed to several factors, including the government’s activities related to domestic debt restructuring and the depreciation of the local currency.
The official audited financial statement for 2022, which was released on July 28, revealed that as of December 31, 2022, the total liabilities of the central bank and its subsidiaries surpassed its total assets by GH¢54.52 billion. The decrease in the Group’s net worth position was primarily caused by the impact of the Domestic Debt Exchange Program (DDEP) and the impairment of certain assets.
Specifically, the impairment of Government of Ghana securities holdings amounted to GH¢48.45 billion, a consequence of the DDEP. Additionally, the BoG reported impairment of loans and advances granted to Quasi-government and financial institutions, reaching GH¢6.12 billion, along with a net exchange loss of GH¢5.27 billion due to currency depreciation.
Addressing the challenging financial situation, the report highlighted that the Board of Directors and Management of the Bank had thoroughly assessed the policy solvency implications and the Group’s ability to generate sufficient income to cover its monetary policy operations and operational costs.
Despite the negative net worth position, the Directors of the Bank intend to continue operations on a going concern basis, basing their decision on various factors, including the anticipation of an improved macroeconomic environment and specific policy actions aimed at enhancing the Bank of Ghana’s balance sheet.
To recover and reestablish a positive equity position, the Bank outlined specific steps and actions. These measures include retaining profits to rebuild capital until equity firmly returns to a positive region and abstaining from monetary financing of the Government of Ghana’s budget.
In this regard, progress has already been made, as a Memorandum of Understanding on zero financing of the budget was signed between the Bank of Ghana and the Ministry of Finance on April 26, 2023.
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Furthermore, the BoG is taking immediate measures to optimize its investment portfolio and operational cost mix, with a focus on bolstering efficiency and profitability.
As the Bank of Ghana strives to overcome the financial challenges and work towards restoring a positive equity position, its efforts are underscored by the commitment to improved economic conditions and prudent policy actions. The implementation of these measures aims to fortify the Bank’s financial standing and contribute to a stable and thriving monetary environment.